Property Management Professionals: Fill & Download for Free

The “anyone can invest in real estate” mantra has been a constant fixture in the US. Regardless of the market going up or down, there is no shortage of real estate gurus telling people how to make a killing on property.Buy foreclosed homes. Renovate and flip. Buy to let. You can find countless guides, websites, ebooks, etc. on these subjects. But I will let you in on a secret.The reason the authors of these systems are selling ebooks and guides is because they cannot make money investing in property.Back to your question. Everyone likes the pitch which is something like this:Hate your job? No money at the end of the month?You can make a killing flipping property or be sitting on the beach while idiots pay you rent.The wealthy don't have a job and have money at the end of the month. So the pitch only works on the middle class.Now, look at how professional investors do property. Do you think they buy an apartment in their neighborhood, collect rent and do the property management? NO. That is not very profitable and it is not scalable.If I want to get income from residential real estate I get into a deal. A while back I purchased with other people a multifamily development of 169 units. There is professional property management and the debt on the property was at a cheaper rate than I could get on a mortgage. I got a check every quarter and a report.There are plenty of property deals on multifamily, hospitality, office, medical and industrial assets. These are listed, but usually too large for a middle class investor to do alone. Plus you really don't want to do alone. So network with people in your community. Doctors and athletes in particular get offered a lot of these deals.Also, property management companies try to find investors so they can then earn fees from running the property. I'm looking at a deal now that was sent to me by a company that manages hotels. They have more than 200 hotels in the US and know what they are doing. But they are not in the business of owning hotels so they need investors. It works both ways.As in any investment, do your homework and make sure you are investing with solid people and in a good opportunity.Good luck!

Let’s put it this way: As an attorney, I’ve had clients with rental properties where:One tenant murdered another tenant.A tenant died from smoke inhalation , about a week after my client hired an electrician to fix a broken ceiling fan in one of the bedrooms (where the fire started).A car drove right through the building, injuring a guest inside.A child is electrocuted after coming into contact with exposed wiring in a rehab, after sneaking through the fence surrounding the property.So, here’s a test: Which of the above may not be covered by insurance?If you guessed #2 and #4, you’d be right. Why? Because insurance will not cover “intentional acts.” The fact-pattern in #2 was unfortunate: The electrician hired wasn’t licensed, insured or bonded. We had to fight the insurance company on this, even in the face of evidence showing the electrician lied about being licensed, insured and bonded on his website.The fact-pattern in #4 was also unfortunate. Turns out the the contractor’s labor didn’t lock the gate on their way out one evening. Insurance was also declined, although they agreed to pay for defense.Insurance isn’t the end-all, be-all for proper liability protection. Even in instances that are difficult to predict or outside your control, you run the risk of insurance attempting to decline coverage claiming some sort of exclusion or intentional act. When you’re renting property, by definition you have other third-parties on your property that you cannot always predict or control their behavior.So, for all the answers that recommend any form of “partnership” or sole-proprietorship, they are speaking purely from a tax perspective and not considering the possibility of a catastrophic event.What do prudent owners of rental properties do? They do the following:First, they form an Anonymous LLC as a Holding Company / Umbrella company to act as a separator between themselves and all their holdings. This provides security, limits the opportunity for being harassed or a target, and maximizes liability protection. This Umbrella company will be the taxable entity. If you want to tax yourself under Subchapter C, then I recommend Wyoming. If you want to tax yourself under any form of pass-through, then I recommend New Mexico. You can learn more here: Maintain Your Privacy With an Anonymous LLC | Law 4 Small Business, P.C. (L4SB)Second, form a separate LLC for EACH property you own. Let’s call these “Property LLC’s”. They will be owned by the Umbrella Company. It’s important that each Property LLC acts as its own P&L, with its own FEIN, bank account, etc. Ideally, the Property LLC just holds property, and does NOT act as the Property Manager. For that, see below. The Property LLC hires a Property Manager to act as the landlord for the place. The Property LLC should be located in the state where the property is located. (Of course, we can do this for you at a very affordable rate, but it’s important you have a professional do this, to help protect anonymity, and minimize liability. Learn more here: Form a Limited Liability Company (LLC) | Law 4 Small Business, P.C. (L4SB).Third, do you want to be your own property manager? If so, make sure you (a) check the local laws in the state where the property is located, because some states require that a broker be involved, and (b) form another LLC as your Property Manager, that actually enters into contracts and charges for its services with the Property LLC’s.Seems like a bit much, but this is all structure. From a tax perspective, all the sub-LLC’s (i.e. Property LLC’s and Property Manager) are solely owned by the Umbrella Company, which means they are “disregarded” for tax purposes. All their profits and losses flow up to the Umbrella company, and you deal with income taxes at that level.[Thank you to Michael Crowe for this:] Some states such as California, require separate tax returns and an $800 minimum tax. So, be sure to talk with a local CPA / business lawyer to make sure you’re doing everything correctly.This structure then provides tremendous liability protection, anonymity, flexibility and scalability.Good luck to you. Larry.

The best thing you can do to ensure the success of your investment when you live far away is to work with a professional property management!Great property management is a big part of a successful real estate investing career. Having to manage an investment property requires time, organization, social skills, and attention to details. If you’re investing in a rental property that is far away from where you live, managing your property is going to be a hard task.There are many professional property management companies (such as Pillow for example) that are experienced in the real estate market and provide a set of services to real estate investors. Some of the main services that a professional property management provides include marketing, financing, tenancy, eviction, and repairs and maintenance, among others.Professional property management are great not only if you’re investing in a rental property located in a different city, but also for property investors who invest in multiple investment properties, Airbnb rentals, and part-time investors. Keep in mind, though, that because of the many tasks they perform, professional property management companies are not cheap.To help you determine whether or not you should hire a professional property management, read this: Professional Property Management: A Key to Success or a Waste of Money?For the latest news and guides related to real estate investing, check out Mashvisor!